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Question Time: Government Slashes Study Loan Repayment Threshold

Question
Mehreen Faruqi 4 Jul 2019

Senator FARUQI (New South Wales) (14:40): My question is to Minister Birmingham, the minister representing the Minister for Education. Minister, in the last three years, your government has slashed the repayment threshold for study loans by nearly 20 per cent, in effect cutting the pay of low-income workers. Just this week, the government slugged another 136,000 Australians by cutting the threshold by another $6,000. How does the government justify giving tax cuts to millionaires while they punish low-income workers for studying?

Senator BIRMINGHAM (South Australia—Minister for Trade, Tourism and Investment and Deputy Leader of the Government in the Senate) (14:41): I thank the senator for her question. I make the point that, firstly, you need to appreciate, of course, that students who leave university or other forms of study with a student debt and get jobs are students who then go on and pay taxes, and those students will benefit from there being lower taxes. They will have those benefits long after they have repaid their student loans, and those benefits will help them through their lives to be able to buy their homes, to establish themselves, to save for their retirement, to support their families—to pursue all of those sorts of things that you expect graduates to seek to do.

The HELP scheme, our student loan scheme, as this chamber should know and acknowledge, is one of the most generous schemes in the world. It allows Australians to go to university for an undergraduate degree and face no up-front fees whatsoever. It allows them to take on a loan that has no real interest rate whatsoever and that has no additional fees whatsoever attached to it, and then to only pay it back at reasonable income levels.

What this government did—yes, the senator is right—is lower the starting threshold, but we also implemented a new lower first repayment rate. There is a new one per cent repayment rate. From memory—it's a little while since I knew all these statistics off by heart—that equates to around an $8 a week repayment of student loans for those who first reach that threshold. We also made sure that graduates earning higher incomes repay their loans faster, by putting in place higher repayment rates at higher incomes, because that's the way you sustain the most generous student loans scheme in the world.

The PRESIDENT: Senator Faruqi, a supplementary question.

Senator FARUQI (New South Wales) (14:43): Minister, every single person the government has targeted through these unfair changes to study loans is a low-income worker who already faces low wages, growing underemployment and the increasing cost of living. So how can the government claim to support low-income earners when you've just slugged 136,000 of them with additional unfair forced repayments?

Senator BIRMINGHAM (South Australia—Minister for Trade, Tourism and Investment and Deputy Leader of the Government in the Senate) (14:44): Obviously there are perils—there are many new senators in the chamber—when your supplementary question is already written out and you don't change it or vary it when you hear the previous answer. I will repeat again for the senator's interest that one of our reforms was to put in place higher repayment rates at high-income thresholds. One of our reforms means that there is now a 10 per cent repayment rate for those earning more than $134,573. Those who leave study and get jobs that are well paid will absolutely be repaying their loans back much faster than they would have in the past. That is good news in terms of the sustainability of our student loan scheme, which has billions of dollars of debt that the government carries on behalf of students and which we want to make sure we can continue to offer on incredibly generous terms. In terms of lower incomes, there is the new one per cent threshold that kicks in at $45,881— (Time expired)

The PRESIDENT: Senator Faruqi, a final supplementary question.

Senator FARUQI (New South Wales) (14:45): Minister, isn't this just yet another blatant cash grab by the government from those who can least afford it? Will you just admit that your government doesn't give a damn about students or low-income workers and that the only people you care about are your millionaire mates?

Senator BIRMINGHAM (South Australia—Minister for Trade, Tourism and Investment and Deputy Leader of the Government in the Senate) (14:45): It may come as no surprise to the chamber that I'm not going to admit any of the things that Senator Faruqi has invited me to admit. I will acknowledge, however, that the Australian Greens don't give a damn about how you manage money at all. The Australian Greens don't give a damn about whether or not the debt book is sustainable for our student loan scheme or anything else, because they seem to think that money just grows on trees. What our government will do, and has done, is make sure that we as a country can continue to afford to provide the most generous access to university and to study options without up-front fees for those students. We preserve and maintain that by making sure that we have a student loan scheme where the bulk of those funds are repaid so that it is sustainable for generations into the future. That's who we're looking after.

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